Good and Great assets

Let’s continue the consideration of assets that we started on Monday:

GOOD ASSETS:  A “good” asset is one that stays  more or less stable in value but which  provides  positive  cash  flow  from  month  to  month.  Over  time,  the  value may rise or fall slightly, but the money that it puts into your pocket each month will more than make up for any fluctuation in the price. An example of a “good” asset  would  be  something  like  an  antique  car  that  you  rent  out  for  special occasions. We have all seen the vintage Rolls Royce autos that happy couples rent to ride from their wedding ceremony to their reception. Well, think for a moment: where  did  they  get  that  car from?  They  had  to  have rented  it  from  somebody. And that car is not likely to go down  in  value,  so  with  each rental  it  brings  in  money  to the owner.

Another  example  is  flipping  a  piece  of  real  estate  with  seller  financing.  This  is where the buyer provides a down payment and agrees to some sort of payment plan for the remainder of the balance  (usually with interest). For at least a limited time (a few months or up to a few years) that piece of real estate will be a “good” asset that will hold its value and provide cash flow. But we can’t yet say that it is a “great”  asset  because  that  cash  flow,  even  if  it  lasts  for  several  years,  will eventually run out.

Another  “good”  asset  can  be  something  like selling an  eBook online.  When  you first publish a book, there tends to be a swelling of initial interest that eventually slows  down  to  a  steady  trickle.  Now,  there  are  things  that  you  can  do  to continually  promote  your  book  in  order  to  reach  fresh  audiences,  but  what’s more likely is that your sales will fall into a natural slump (unless you are the next Michael  Crichton,  in  which  case  your  grandkids  will  thank  you).  An  eBook  is  a “good” asset because  it  provides  steady cash flow and doesn’t go down in value; but as is the case with a real estate deal, the money will eventually stop flowing.

GREAT ASSETS: You are probably getting the hang of this asset classification thing, so identifying great assets shouldn’t be that hard. A “great” asset should go up in value, should provide positive cash flow, and the income stream shouldn’t dry up anytime in the foreseeable future. A “great” asset is the kind of investment that you  should eventually  use  to  fill up your portfolio.  The more “great” assets that you can invest in, the more cash you will have flowing to your bank account every month  and the less you will ever have to worry about making ends meet. If you can  get  your  hands  on  enough  “great”  assets,  you  will  even  have  the  option  of quitting your job and spending your days doing whatever your passion is. So what are some examples of “great” assets? Let’s look at a few and then see if you can imagine any others.

Owning  a  rental  property is  a  prime  example  of  a  “great”  asset.  Think  about it. The property itself will most likely hold  its value over the years, and the rent that you  charge  (in  most  areas)  can  be  periodically  adjusted  according  to  inflation.

The same principles can work even if you are renting out vacant land for people to drive their ATVs on, for agriculture, for hunting or fishing, for camping, or even for stargazing.  The  land  itself  is  likely  to  slowly  rise  in  value  over  the  years  (they aren’t making any more land, after all) and it will continue to provide a constant stream of income for you and your family depending on how well you market it to

your target audience and how well you treat those clients. Another  aspect  of  a  “great”  asset  is  that  it  doesn’t  require  your  constant supervision to generate  income. While some people may  hesitate  at the idea of being  a  “landlord”,  there  are  ways  to  eliminate  the  stress  and  potential  hassle that come with renting out a property.  For example, you can  make a  deal with  a person who you trust implicitly  for them  to handle  the  choosing  of  tenants,  rent collection,  and  the  taking  care  of  small  repairs  and  issues  on  the  property.  In exchange,  that  person  can  keep  a  percentage  of  the  rent.  If  you  don’t  know anyone  in the area, then you can look into working with a property management company, who will do all of the above  in exchange for a fee of anywhere from  6-10% of the monthly rental payment.

The  fundamental  purpose  of  a  Forever  Cash  asset  is  to  give  you  money  each month  without  your  having  to  work  long  hours.  The  same  thing  can  be accomplished  by  being  the  owner  of  a  business  which  is  supervised  by  a competent manager.  Because you were the one who  put up the seed money to get the business going  (or to purchase it)  you will be repaid for life with a steady stream of income while others do the actual work.


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